The Bush administration on Friday filed a trade case against China over its use of export subsidies to promote Chinese products.

U.S. Trade Representative Susan Schwab, in announcing the case, said China was violating global trade rules administered by the World Trade Organization in the way it operates a “famous brands” program to promote the sale of Chinese goods in other countries.

“We were disturbed to find that China still appears to be using WTO-illegal measures to promote its exports, ranging from textiles and refrigerators to beer and peanuts,” she said in a statement.

The United States could be cleared to impose economic sanctions against China if negotiations between the two nations fail to resolve the dispute and if a WTO hearing panel rules in favor of the U.S.

The administration said that China, in an effort to encourage worldwide recognition of Chinese brand names, has provided numerous types of subsidies at various levels of government. The allegedly illegal subsidies included: cash rewards to exporters, preferential government loans for exporters, research and development funds to develop new products for export, and payments to lower the cost of export credit insurance.

“We are going to the WTO today because we are determined to use all resources available to fight industrial policies that aim to unfairly promote Chinese branded products at the expense of American workers,” Schwab said.

U.S. industry groups applauded the action.

“The action confirms yet again that China’s export machine is built in large part on unfair government subsidies, many of which are illegal,” said Cass Johnson, president of the National Council of Textile Organizations. “The U.S. textile industry is extremely concerned that China will use these as well as many other subsidies to surge into the U.S. market once quotas on Chinese textile and apparel products are removed on Jan. 1.”